Break-even Analysis

The break-even analysis in production management and industrial engineering consists of total cost (i.e. fixed cost and variable cost) and sales revenue. The fixed costs do not increase or decrease with the sales or production such as rent, insurance, salaries etc. The variable costs increase or decrease with the sales or production such as raw material, direct labor, indirect material etc. The point at which a business neither makes a profit nor incurs a loss, is known as break even point. It is a point when sales revenue and total cost lines intersect.